Feb. 15 (Bloomberg) -- Michel Barnier, the European Union’s
financial services chief, pressed the U.S. to hew to
international rules for bank stability and derivatives, warning
“home-grown” regulations can lead to costs and conflicts.

The Federal Reserve proposed in December that foreign
lenders organize their U.S. units as subsidiaries and hold
capital independently from their parent firms to make it easier
for U.S. regulators to seize local assets in a crisis.

“Large international banks pose indeed potential
problems,” Barnier said in remarks today at a luncheon in New
York. “However, I am not fully convinced by the proposed
approach on foreign banking organization,” he said, without
elaborating on specific rules. Regulators must work on “a
proportionate and cooperative approach,” he said.

The U.S. and the EU are overhauling their rulebooks for
banks and markets in the wake of the financial crisis that
followed the collapse of Lehman Brothers Holdings Inc. While
authorities on both sides of the Atlantic claim they are
faithfully implementing international standards, lenders and
regulators have warned that the plans don’t always align and
could leave them facing competing requirements.

Barnier last year joined the finance ministers of the U.K.,
Japan and France in calling on the U.S. to revise its draft
rules for over-the-counter derivatives, saying they would lead
to clashing requirements and unnecessary costs.

Legal Conflicts

“Expanding interpretation of home-grown rules to
transactions that are already covered by equally solid foreign
rules will only lead to legal conflicts,” he said of
derivatives rules in today’s remarks. “It will create
uncertainty, increase costs and push trade to less well
regulated places. This is precisely what we want to avoid.”

Barnier also said he continues to be “disappointed by the
slowness of the U.S. in moving towards internationally agreed
accounting standards.”

The Basel committee has narrowed the definition of what
counts as capital. It also devised a method of tallying assets
for calculating leverage ratios that puts aside the different
accounting standards used in the U.S. and Europe. The new method
would increase the balance sheets of U.S. banks.

“I know this requires time,” he said. “And I also know
that the U.S. business community is still to be convinced.”

The euro area will add proposals in coming months for a
single banking supervisor system for the euro area, which would
handle bank failures in the 17-nation euro area, Barnier said.

“In some ways, this new system will be similar to, and
perhaps even simpler than, the U.S. system of banking
supervision,” he said.